I really enjoy reading The Anti-Planner for insights and example of where government goes wrong. The most common example is using public money to fund private goods, such as light rail systems. This exceptional post explains why this problem is getting worse:

Funding agencies out of user fees keeps agency officials in touch with their mission of serving those users. As a result, they tend to make decisions that make the users happy without irritating anyone else, such as taxpayers who might otherwise have to subsidize those users.

At some point, however, user fees aren’t enough. In the case of Muni, politicians interfered with the agency’s ability to increase fares or reduce costs by replacing rails with buses. They also demanded that Muni pay the highest wages in the industry. Eventually, Muni required subsidies to keep afloat.

In the case of the Port Authority, bridge tolls brought in so much cash that politicians insisted on diverting some of the money to subsidize subways, buses, and even the World Trade Center, a giant ego project that was totally unnecessary given that Manhattan had a surplus in office space when it was built.

In the case of the Forest Service, Congress diverted a significant portion of the agency’s revenues to counties, so that many counties ended up getting many times what they would have received in taxes had the forests been private. Meanwhile, Congress also restricted the agency’s ability to charge fair market value for most of the goods and services it offered.

For whatever reason, eventually all these agencies became dependent on federal, state, or local appropriations. When that happened, the missions of the agencies became muddy. Was the goal of transit agencies to move people or to pay fat wages to transit union members and award giant contracts to rail builders? Was PATH’s goal to smoothly operate the region’s transportation systems or to build monuments for state governors? Was the Forest Service’s goal to provide sound land management for a wide range of forest users or to cater to the most politically powerful users?